Due to the transfer of the Belarusian business, an amendment to the Companies Law is initiated

Added a comment from the Lithuanian Association of Banks.

In order to increase the added value of choosing a company in Lithuania, we must address the emerging issues related to faster business establishment in Lithuania. Resolving the issue, we would initiate changes to the Business Law, says Minister of Economy and Innovation Rimantas Sinkeviius.

The amendments to the Public Limited Companies Law allowed third parties to open a company savings account that would be established not only in banks operating in Lithuania, but also in electronic money institutions, the ministry reports.

The provisions on the prevention of money laundering and terrorist financing will not be changed, the report emphasizes.

It also states that according to data from the Bank of Lithuania, in 2019. Banks operating in Lithuania do not open accounts for 343 clients due to money laundering or terrorist financing (in 2018 there were 666 clients of this type). In the Lithuanian banking system, more than 30,000 accounts are opened for Belarusian citizens who work, carry out economic activities, study, etc. Some 1,300 accounts have also been opened in Lithuania, at least one of whose owners is a Belarusian citizen. Compared with previous periods, the number of accounts of Belarusian citizens in the banking system is increasing.

Regulation limits fintech activity

According to current regulations, accounts can only be opened for the establishment of a company in companies with a banking license.

We are really analyzing intensely at the moment, because the European Union regulation also works and affects the legislation, if it is necessary to have an account in a bank or in an electronic money institution when setting up a business. Such a change, if we could do it, would allow competition in the market to expand, says Marius Skuodis, Deputy Minister of Economy and Innovation.

Electronic money institutions are in some cases more flexible, although the requirements apply in the same way and all legislation applies in other ways. If it is necessary to verify information about a future customer, check in ways that banks do not use and the like, add it.

According to the Lithuanian Association of Information and Communication Technology Companies Infobalt, the current regulation unreasonably restricts the activities of companies in the financial sector, business development opportunities and competition in the financial services market. As a result, the EU is losing business in Lithuania and with the country’s economy and competitiveness.

The provisions of the law not only discriminate against finite companies without a good legal basis, but also restrict the right of the founding company to choose the payment service provider that best suits its needs, according to the Ministries of Economy and Finance and the Financial Crimes Investigation Service.

On Monday, representatives of the Ministry of Economy and Innovation met with representatives of banks and e-money institutions and venture capital funds about the possibility for Belarusian business representatives to open bank accounts in Lithuania. According to the vice minister, it was agreed that the companies communicate the requirements earlier to facilitate the transfer of business for the companies.

There are really a variety of problems, in some cases everything is going well, but sometimes we are surprised by the demands we make on business. Financial market participants are ready to react, as the main complaints concern the period it takes to open an account and present certain documents, and financial institutions are also ready to react and communicate earlier, which is necessary, he says. M. Skuodis.

There are other aspects that market participants may need to adjust to the legal basis due to remote client retention, he added.

Marius Pareius, vice president of e-money institution Paysera, says that in Lithuania there are conditions for Belarusian-owned companies to open accounts with a Lithuanian account number (IBAN), but this requires company registration in Lithuania. According to him, it is even easier to open personal accounts for company employees.

Due to higher inspection costs and concentration of local clients, banks have reserved and opened such accounts for companies established in Lithuania.

According to M. Pareius, if the shareholding structure of a new company is generally understood and the final beneficiaries are aiks, then IT company Baltarusi would take several days to open an account.

Investing in Lithuania According to the data, more than half of the information technology (IT) companies in Belarus are interested in the possibilities of relocating, but are unable to do so so far due to legal obstacles.

Financial institutions are subject to EU requirements

Commenting on the ongoing discussions on the conditions for the establishment of Belarusian companies in Lithuania, the Lithuanian Association of Banks (LBA) emphasizes that the most important thing to establish a company in Lithuania is to open a temporary savings account for the transfer of fixed capital. This requirement applies to both national and foreign legal entities.

It is important to note that opening such an account does not require an exhaustive customer confusion procedure, which becomes mandatory to switch the savings account to a bank account, according to the LBA comment.

All financial institutions are obliged to comply with the rules of prevention of money laundering and financing of terrorism in all countries of the European Union to carry out customer confusion procedures, which are mandatory for both citizens and guests who become customers. Financial institutions should collect information on client activities, origins, beneficiaries and verify it in an independent source, emphasizes Aidas Budrys, acting president of the LBA.

The collection and verification of customer information related to third parties often takes more time, as the information must be verified against the official records of another country. The process also depends on whether the person has the right to reside in Lithuania, that is, is a resident of the country or not, according to the association’s report.

According to the LBA, since the beginning of the year, financial and credit institutions linked by the organization have opened some 2,000 accounts for Belarusian citizens. In total, more than 30,000 Belarusians working or living in Lithuania, as well as more than a thousand companies, of which at least one owner is a Belarusian resident, have opened accounts in the country’s banks.

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